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CIRCULAR No

CIRCULAR No. 24/2002/TT-BTC OF MARCH 20, 2002 GUIDING THE IMPLEMENTATION OF TAX OBLIGATIONS FOR FINANCIAL LEASING ACTIVITIES

Pursuant to the Value Added Tax Law; the Enterprise Income Tax Law; the Import Tax and Export Tax Law; the Ordinance on Charges and Fees; as well as the guiding documents of the Government and the Ministry of Finance;

Pursuant to the Government�s Decree No. 16/2001/ND-CP of May 2, 2001 on the organization and operation of financial leasing companies;

In order to make it suit the business characteristics of financial leasing activities, the Ministry of Finance hereby guides the implementation of the provisions on taxes and fees for the operation of financial leasing companies, concretely as follows:

I. REGARDING VALUE ADDED TAX AND ENTERPRISE INCOME TAX

They shall comply with the Value Added Tax Law, the Enterprise Income Tax Law, as well as the Government�s and the Finance Ministry�s documents detailing and guiding the implementation thereof;

II. REGARDING IMPORT AND EXPORT TAXES

1. General principle: They shall comply with the Law on Import Tax and Export Tax as well as the Government�s and the Finance Ministry�s documents detailing and guiding the implementation thereof;

2. In order to make it suit the business characteristics of financial leasing activities, several points are specifically guided as follows:

a/ For machinery, equipment, transport means and other movables imported by financial leasing companies for lease, import taxes shall be the same as the cases where the lessees directly import these assets; concretely as follows:

- In cases where the lessees are foreign-invested enterprises: if the leased machinery, equipment and transport means are import goods on the approved list of tax-free import goods as prescribed in Article 57 of the Government�s Decree No. 24/2000/ND-CP of July 31, 2000 detailing the implementation of the Law on Foreign Investment in Vietnam and Point 1.b, Section III, Part II of the Finance Ministry�s Circular No. 13/2001/TT-BTC of March 8, 2001 guiding the implementation of tax provisions for various investment forms under the Law on Foreign Investment in Vietnam, such machinery, equipment and transport means shall be exempt from import tax. In cases where such assets are recovered before the expiry of the leasing term and the lessors again lease them to other foreign-invested enterprises, they shall also be exempt from import tax.

- In cases where the lessees are domestic investors who implement projects for investment in the branches and trades prescribed in List A or projects for investment in the geographical areas prescribed in List B and List C, which were issued together with the Government�s Decree No. 51/1999/ND-CP of July 8, 1999 detailing the implementation of the Law on Domestic Investment Promotion, if the leased machinery, equipment and transport means are special-use import goods which can not be produced at home yet or can be produced but fail to meet the quality requirements, they shall be exempt from import tax. In cases where such assets are recovered before the expiry of the leasing term and the lessors again lease them to domestic investors that implement projects for investment in the branches and trades prescribed in List A or projects for investment in geographical areas prescribed in List B and List C, which were issued together with the Government�s Decree No. 51/1999/ND-CP of July 8, 1999, they shall also be exempt from import tax.

- In cases where the lessees are enterprises in foreign countries, the above-said import assets shall comply with the mechanism for goods temporarily imported for re-export. In cases where such leased assets are recovered according to the provisions in Clause 1, Article 28 of the Government�s Decree No. 16/2001/ND-CP of May 2, 2001, the lessors must pay import tax according to the current regulations.

b/ For the leased assets recovered under the provisions in Clause 1, Article 28 of the Government�s Decree No. 16/2001/ND-CP of May 2, 2001, if the recovered assets are those imported from foreign countries, when being exported, export tax shall not be paid and the import tax amount already paid shall be refunded, depending on the residual value of such assets, the procedures and dossiers for tax non-payment and reimbursement of tax were prescribed in the Finance Ministry�s Circular No. 172/1998/TT-BTC of December 22, 1998.

III. REGARDING REGISTRATION FEES

1. General principle: They shall comply with the Ordinance on Charges and Fees; as well as the Government�s and the Finance Ministry�s documents detailing and guiding the implementation thereof;

2. In order to make it suit the business characteristics of financial leasing activities, several points are specifically guided as follows:

Pursuant to Clause 3, Article 22 of the Government�s Decree No. 16/2001/ND-CP of May 2, 2001: if the ownership over the leased assets of financial-leasing companies is transferred to the lessees (upon the expiry of the leasing term), the lessees shall not have to pay registration fees.

Regarding procedures: They shall comply with the guidance in Section 4, Part II of the Finance Ministry�s Circular No. 28/2000/TT-BTC of April 18, 2000 guiding the implementation of the Government�s Decree No. 176/1999/ND-CP of December 21, 1999 on registration fees. When registering for declaration of registration fees with the tax bodies, the units must produce:

- The financial-leasing contract and record on liquidation of the contract between the two parties, with certification of the competent State agency(ies).

- Papers on asset transfer between the two parties.

- The asset ownership right certificate of the financial-leasing company.

IV. IMPLEMENTATION ORGANIZATION

This Circular takes implementation effect 15 days after its signing. If any problems arise, the units shall promptly report them to the Ministry of Finance for study and settlement.

For the Minister of Finance

Vice Minister
VU VAN NINH